The banker who spent his bonus on 400 pubs could save the British pub

After being hit by the smoking ban, recession and cheap supermarket booze, the pub industry is finally fighting back. Matthew Boyle finds a new breed of  investor is moving into the sector

Noah Bulkin is not the man you’d expect to be pouring your next pint of beer.

The Oxford-educated Mr Bulkin, 37, spent 15 years cutting deals as a mergers and acquisitions banker for Merrill Lynch and Lazard before leaving last year to start his own pub company, Hawthorn Leisure.

He has acquired hundreds of struggling pubs and plans to turn them around by tracking everything from the price charged for beer to daily sales fluctuations to customers’ drink preferences.

“Understanding pricing and the mix of drinks is incredibly important,” Mr Bulkin says in an office overlooking Hyde Park in London. “A lot of pubs don’t have that data. If you can make them the core of your business, there’s a fantastic opportunity.”

Over the past decade, Britain’s £70bn pub industry has fallen on hard times. About 10,000 outlets have closed since 2004, according to the British Beer & Pub Association, hit by the recession, a 2007 smoking ban and cheaper supermarket booze. The volume of beer drunk in British bars has declined 45 per cent since 2000, leaving companies such as Punch Taverns and Enterprise Inns weighed down with debt after years of rapid expansion.

The industry is fighting back, thanks in part to investors such as Mr Bulkin. After years of declines, sales at pubs open at least a year have grown for 14 consecutive months, according to pub industry data provider CGA Strategy.

Pub deals valued at $730m (£426m) have been announced in the past year, more than in the previous two combined. Shares of pub companies  JD Wetherspoon, Spirit Pub and Fuller Smith & Turner have all bested the FTSE  All-share index over the past 12 months.

Britain’s 50,000 pubs are split into three parts: managed outlets, controlled by companies such as Wetherspoon; tenanted or “tied” pubs, where the property is run by individual tenants who pay rent and buy their beer from a corporate landlord such as Punch Taverns; and free houses, which operate independently.

The tenanted sector has suffered most, due to what a Parliamentary committee has called “downright bullying” of tenants by the pub companies, who it said often kept them in the dark about how rents were calculated. Flying in the face of conventional wisdom, this is where Mr Bulkin is focusing.

So far this year, the entrepreneur has bought 363 pubs, including 275 tenanted and leased sites from the brewer Greene King, with which it then signed a three-year supply deal. He says there are more than 1,000 more pubs on his radar.

To boost sales, he will add food, repair tattered pool tables and widen the beer selection – offering popular ales such as Doom Bar. A former Lazard colleague has built analytical models for each pub, estimating potential sales and earnings.

“Applying some granular analysis of what a person might drink and what they will pay is an incredibly important element,” Mr Bulkin says. “This hasn’t been done in the bottom end of the sector.”

For instance, two beers that are identical in price per pint and taste similar could deliver as much as an 80 per cent difference in profit per keg to the pub, Mr Bulkin says. Area managers will check in on tenants more often, discussing which drinks to offer and at what price. There is a risk, though: replacing, or changing the price of, a popular ale can send customers fleeing across the street to a rival establishment.

Hawthorn Leisure is backed by New York-based Avenue Capital Group, a sign that “private equity is coming back to the sector with a vengeance”, according to Paul Charity, the managing director of Propel Info, an industry publication. Last year, Cerberus Capital Management bought Admiral Taverns, which it plans to use as a platform for more acquisitions. This month, Risk Capital Partners of London invested in The Laine Pub Company, a 45-pub chain based in Brighton.

The fresh money has inspired new business models. Oakman Inns & Restaurants, a chain of nine high-end pubs in Hertfordshire, generates 60 per cent of its sales from food.

Its founder, Peter Borg-Neal, uses the same meat supplier as Windsor Castle, and spends about £1m refurbishing the pubs he buys, adding dining rooms, cosy outdoor areas and services such as Orderella, a smartphone ordering app.

Oakman’s pubs are data-driven, linked by systems that allow managers to analyse sales and customer traffic patterns hourly, rather than waiting until the end of the month. One supplier of such technology, Zonal Retail Data Systems, will increase sales to about £50m this year, more than double the figure for 2010.

To be sure, no technology can improve the camaraderie that attracts Britons to pubs. “I feel special here,” says Bruce Brunson, 37, at the White Horse in Welwyn, Hertfordshire. “When I walk in, it’s like I’m Norm from Cheers.”

© Bloomberg

Start your day with The Independent, sign up for daily news emails
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Guru Careers: Pricing Analyst

£30 - 35k: Guru Careers: We are seeking a Pricing Analyst to join a leading e-...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £45K YR1: SThree: At SThree, we like to be dif...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + competitive: SThree: Did you know? SThree is a mul...

Guru Careers: C# Project Team Lead

£55 - 65k (DOE): Guru Careers: A unique opportunity for a permanent C# Develop...

Day In a Page

Blundering Tony Blair quits as Middle East peace envoy – only Israel will miss him

Blundering Blair quits as Middle East peace envoy – only Israel will miss him

For Arabs – and for Britons who lost their loved ones in his shambolic war in Iraq – his appointment was an insult, says Robert Fisk
Fifa corruption arrests: All hail the Feds for riding to football's rescue

Fifa corruption arrests

All hail the Feds for riding to football's rescue, says Ian Herbert
Isis in Syria: The Kurdish enclave still resisting the tyranny of President Assad and militant fighters

The Kurdish enclave still resisting the tyranny of Assad and Isis

In Syrian Kurdish cantons along the Turkish border, the progressive aims of the 2011 uprising are being enacted despite the war. Patrick Cockburn returns to Amuda
How I survived Cambodia's Killing Fields: Acclaimed surgeon SreyRam Kuy celebrates her mother's determination to escape the US

How I survived Cambodia's Killing Fields

Acclaimed surgeon SreyRam Kuy celebrates her mother's determination to escape to the US
Stephen Mangan interview: From posh buffoon to pregnant dad, the actor has quite a range

How Stephen Mangan got his range

Posh buffoon, hapless writer, pregnant dad - Mangan is certainly a versatile actor
The ZX Spectrum has been crowd-funded back into play - with some 21st-century tweaks

The ZX Spectrum is back

The ZX Spectrum was the original - and for some players, still the best. David Crookes meets the fans who've kept the games' flames lit
Grace of Monaco film panned: even the screenwriter pours scorn on biopic starring Nicole Kidman

Even the screenwriter pours scorn on Grace of Monaco biopic

The critics had a field day after last year's premiere, but the savaging goes on
Menstrual Hygiene Day: The strange ideas people used to believe about periods

Menstrual Hygiene Day: The strange ideas people once had about periods

If one was missed, vomiting blood was seen as a viable alternative
The best work perks: From free travel cards to making dreams come true (really)

The quirks of work perks

From free travel cards to making dreams come true (really)
Is bridge the latest twee pastime to get hip?

Is bridge becoming hip?

The number of young players has trebled in the past year. Gillian Orr discovers if this old game has new tricks
Long author-lists on research papers are threatening the academic work system

The rise of 'hyperauthorship'

Now that academic papers are written by thousands (yes, thousands) of contributors, it's getting hard to tell workers from shirkers
The rise of Lego Clubs: How toys are helping children struggling with social interaction to build better relationships

The rise of Lego Clubs

How toys are helping children struggling with social interaction to build better relationships
5 best running glasses

On your marks: 5 best running glasses

Whether you’re pounding pavements, parks or hill passes, keep your eyes protected in all weathers
Joe Root: 'Ben Stokes gives everything – he’s rubbing off on us all'

'Ben Stokes gives everything – he’s rubbing off on us all'

Joe Root says the England dressing room is a happy place again – and Stokes is the catalyst
Raif Badawi: Wife pleads for fresh EU help as Saudi blogger's health worsens

Please save my husband

As the health of blogger Raif Badawi worsens in prison, his wife urges EU governments to put pressure on the Saudi Arabian royal family to allow her husband to join his family in Canada